AMB340 Services Marketing

Lecture 2: Consumer Behaviour in

Services Marketing
Big ideas from last lecture
Services are acts, performances, processes and experiences
that create value for the customer (individual or business)
Services are different to goods
Intangible, simultaneously produced and consumed, heterogeneous
(variable), and perishable

Services can be classified according to the underlying process:

Intangible acts on people – mental processing
Tangible acts on people – people processing
Tangible acts on things – possession processing
Intangible acts on things – information processing

The Services Marketing Mix has 3 extra Ps:

People
Physical evidence
Process
Course Overview
PART 1: Lecture 1, 2 & 3
Customer Focus
• Introduction to Services Marketing
•Consumer Behaviour in a Services Context
•Evaluation of Services

PART 2:
Lectures 4, 5, 6, 8, 9 & 10
Creating value using the 7 Ps
•Positioning Services and Developing Service Products
•Distributing Services and Service Environment
•Managing People
•Setting Prices
•Promoting Services and Educating Customers
•Managing the Service Process; Balancing Demand and Capacity

PART 3: Lectures 11 & 12

Managerial Focus
• Complaint Handling and Service recovery
•Managing Relationships and Building Loyalty
Agenda

Three-stage Model of Consumer Behaviour

• Pre-purchase stage
• Service Encounter
• Post-purchase Evaluation
Consumer Decision Making Process

Need Information Evaluation of Purchase Post-Purchase

Recognition Search Alternatives Decision Behaviour

PRE-PURCHASE

Need
Recognition
POSTEXPERIENCE
Information EVALUATION
CONSUMER
Search
EXPERIENCE Post-Purchase
Evaluation of Behaviour
Alternatives

Purchase
Decision
Pre-Purchase Decision-Making: Step 1
Step 1: Need Recognition

People’s unconscious minds

Physical conditions
PRE-PURCHASE
External sources DECISION-MAKING
Need
Recognition
Pre-Purchase Decision-Making: Step 2
Step 2: Information Search

Non-Personal Sources

Personal Sources
PRE-PURCHASE
DECISION-MAKING
Need
Recognition

Information
Search

Evoked set vs. consideration set

Pre-Purchase Decision-Making: Step 3
Step 3: Evaluation of Service Alternatives

Multi-attribute Model

•Consumers use product attributes that are important to them to compare alternate
offerings in the consideration set

•Each attribute has an importance weight

PRE-PURCHASE
DECISION-MAKING
Need
Decision Rules: Recognition
Information
1. Linear compensatory rule Search
Evaluation of
Alternatives
2. Conjunctive rule
Pre-Purchase Decision-Making: Step 3

Search Qualities
Attributes a consumer can determine prior to purchase of a product

Experience Qualities
Attributes a consumer can determine after purchase (or during consumption) of a
product
PRE-PURCHASE
DECISION-MAKING
Credence Qualities
Characteristics that may be impossible to evaluate even after purchase Need
Recognition
and consumption
Information
Search
Evaluation of
Alternatives
Continuum of Evaluation

Most Most
Goods Services

Houses

Automobiles

Restaurant meals

Vacations

Haircuts

Auto repair
Clothing

Jewelry

Television repair

Legal services

Root canals

Medical diagnosis
Furniture

Child care
High in search High in experience High in credence
qualities qualities qualities

Source: Zeithaml, Bitner and Gremler (2006) Page. 52

Perceived Risks of Alternatives

Functional – unsatisfactory performance outcomes

Financial – monetary loss, unexpected extra costs

Temporal – wasted time, delays leading to problems

Physical – personal injury, damage to possessions

Psychological – fears and negative emotions

Social – how others may think and react

Sensory – unwanted impact on any of five senses

Reducing Perceived Risk

What can customers do? What can marketers do?

Word of mouth and extensive Service guarantees / warranties

information search
Service process involvement
Internet comparisons
Image and reputation
Ask knowledgeable employees
Price as an indicator of quality

Trials
Pre-Purchase Decision-Making: Step 4
Step 4: Purchase Decision

With many services, at the point of purchase, customers often know very
little about the service they are buying

Physical goods are produced prior to purchase; services are often

produced as they are being consumed
PRE-PURCHASE
DECISION-MAKING
Risk reduction is therefore even more important Need
Recognition

Information
Search

Evaluation of
Alternatives

Purchase
Decision
Brand Loyalty in Services

Service consumers are likely to be more brand loyal

Lowers perceived risk

Fewer choices are available

Switching costs are higher:

- Search, learning

- Loyal consumer discounts, habit

- Emotional and cognitive costs CONSUMER

EXPERIENCE
Consumer Experience

Comprises critical incidents, termed ‘moments of truth’

Can take different forms differing in duration and complexity

Service encounters differ for every consumer

CONSUMER
EXPERIENCE
Consumer Needs in a Service Setting

Security includes serious physiological issues as well as safety needs such as

our need for protection and stability. Security needs may include avoidance of
physical and/or financial risks.

Respect a fundamental, higher-level human need

Esteem the individual’s self concept, or self identity

Is the service level provided congruent with the consumer’s respect and
esteem needs?

CONSUMER
EXPERIENCE
Control Theory

The notion of control is important in understanding customer reactions to the

social interaction during service encounters

Behavioural Control Perception of control in a situation due

to your own actions

Cognitive Control Perception of control in a situation due

to knowledge, perception and beliefs

CONSUMER
EXPERIENCE
What do consumers see during the
experience?
From the customer’s point of view….
Contact employees
Customer him/herself
Other customers

People
Operational flow of
activities
Steps in process
Flexibility vs. standard Physical Tangible communication
Process
Technology vs. human
Evidence Servicescape
Guarantees
Technology
Website

Source: From “Managing the Evidence of Service” by M. J. Bitner from The Service Quality
Handbook, eds. E. E. Scheuing and W. F. Christopher (1993), pp. 358-70.
Types of Service Encounters (1)

High-contact Services
 Customers visit service facility and remain throughout service delivery
 Active contact between customers and service personnel

Low-contact Services
 Little or no physical contact with service personnel
 Contact usually at arm’s length through electronic or physical distribution
channels

Medium-contact Services
 Lie in between these two
Types of Service Encounters (2)
Types of Service Encounters
Servuction System
Services Theatre Framework

Actors (service workers) are those who work together to produce the
service for an audience (customers)

Setting (service environment/facilities) is the stage where the action or

service performance unfolds

Performance is the dynamic result of the interaction of the actors,

audience and setting
Services Theatre Framework (2)
Services Theatre Framework

Role Theory

“…a set of behaviour patterns learned through experience and

communication, to be performed by an individual in a certain social
interaction in order to attain a maximum effectiveness in goal
accomplishment.” (Thompson, 2003)

In a service encounter both customers and service employees have roles that
must be enacted in order to complete a certain mutual goal

e.g. you know you must complete your reading assignment for each lecture,
arrive on time, listen carefully, and participate in group discussions in tutorials
Services Theatre Framework (3)
Services Theatre Framework

Script Theory

“…a learned sequence of buyer and seller behaviours that are

expected for that service encounter.” (White, 2003)

When the service conforms to the script, the customer has a feeling of
confirmed expectations and satisfaction

Service scripts can be applied to a wide range of service situations

Service scripts are often used when service providers wish to standardise their
service
Emotions and Mood

Emotions and Mood

Affect: boredom, aggression, joy,

disgust, interest, happiness
Critical Incidents

Unsatisfactory encounters are likely to be more influential

on the customer’s future behaviour than satisfactory
ones
Critical incidents can occur pre-consumption and post-
consumption, as well as during service delivery.

Critical Incident Categories:

- Employee response to service delivery system failures

- Employee response to customer needs and POSTEXPERIENCE

EVALUATION
requests Post-Purchase
Behaviour

- Unprompted and unsolicited employee actions

Post-Experience Evaluation

Consumers evaluate the service performance they

experienced and compare it with their prior
expectations
Performance is entirely in the mind of the consumer
 perceived, not actual, service
Service expectations and performance are weighed to
establish satisfaction
Evaluations drive post-purchase behaviour such as repeat
purchase and word-of-mouth
POSTEXPERIENCE
EVALUATION
Post-Purchase
Behaviour
Key Points
Three-stage Model of Consumer Behaviour

Pre-Purchase Decision-Making
• Customers seek solutions to aroused needs
• Evaluation alternatives is more difficult when a service involves experience and
credence attributes
• Customers face perceived a variety of perceived risks in consuming services

Consumer Experience
• Service encounters range from high contact to low contact
• Servuction system consists of two parts:
•Service operations system
•Service delivery system
• Role and script theories help us understand, manage customer behavior during
encounters

Post-Experience Evaluation
• In evaluating service performance, customers weigh performance against
expectations
Let’s talk about…

Assessment 1: Pitch

Title Pitch
Due: Week 5 to 12 (as per tutorial schedule)
Duration: Four minutes max
Group or Individual: Individual

Description: Students will identify a real service organisation that

has a problem with one of the 7Ps or its evaluation, and then pitch
a solution to that problem.
Next Week

• Tutorials start this week! Please attend your

enrolled tutorial.
• Read Chapter 2 this week
• Please take your textbook to tutorials
• Please watch Blackboard for extra materials that
you need to print and take to tutorials